Northwest Airlines polished off a $581 million enhanced equipment trust certificate (EETC) deal last Tuesday, pricing at the tight-end of indicative levels.
Although EETC's are not technically securitizations, they are often marketed to the same investors, industry sources said.
J.P. Morgan Securities and Salomon Smith Barney were joint book-runners on the deal.
According to sources close to the offering, the deal received such strong interest that the book order was filled just two hours after it was announced. The source pegged demand at $3 billion - roughly six times the available supply.
Orders came largely from insurance companies and money managers in the U.S., where demand for fixed-rate bonds is much stronger.
The receivables pool contained an extremely liquid group of aircraft, nine new Airbus 319s as well as two Boeing 747s and three Boeing 757s, scheduled for delivery in 2002. Also, since Northwest is rated double-B by Standard & Poor's, the secured bonds offer a good opportunity for investors to gain exposure to the name while minimizing risk.
This was Northwest's first deal of the year and the airline is likely planning to tap the market once more in 2001. Northwest has typically been a biannual issuer, but also has a large order book of new aircrafts, sources said.